Output Fluctuations and Monetary Shocks

Carmen Reinhart and Vincent Reinhart

MPRA Paper from University Library of Munich, Germany

Abstract: Using annual data for Colombia over the last thirty years and a new battery of econometric techniques, we test opposing theories that explain macroeconomic fluctuations: The neoclassical synthesis, which posits that, in the presence of temporary price rigidity, an unanticipated monetary expansion produces output gains that erode over time with increases in the price level; and an alternative explanation, which focuses on "real" technological or preference shocks as the sources of output changes. The coefficients from these systems are used to examine two basic propositions: the long-run neutrality of nominal quantities with respect to permanent movements in the money stock; and the short-run sensitivity of output to inflation.

Keywords: monetary; policy; exchange; rates; output; capital; controls; multipliers (search for similar items in EconPapers)
JEL-codes: E3 E4 E5 F3 (search for similar items in EconPapers)
Date: 1991-03
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Citations: View citations in EconPapers (15)

Published in IMF Staff Papers 4.38(1991): pp. 53-86

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Related works:
Journal Article: Output Fluctuations and Monetary Shocks: Evidence from Colombia (1991)
Working Paper: Output Fluctuations and Monetary Shocks: Evidence from Colombia (1991)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:13839

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